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Payment protection disclosures cast bad light CUNA
WASHINGTON (10/21/10)--Credit Union National Association (CUNA) President/CEO Bill Cheney this week said that CUNA and CUNA Mutual will be working with credit unions to oppose proposed changes to the Federal Reserve’s Regulation Z that would require new disclosures for credit life, credit disability, debt cancellation and debt suspension. CUNA in a Wednesday letter to credit unions said that the Fed proposal goes “well beyond ensuring the consumer is informed and makes a reasoned decision – the proposed regulatory language casts the products in a strictly negative light and strongly discourages the purchase of these products.” “The proposed disclosures misrepresent the purpose and value of payment protection products to credit union members,” and will likely “have a significant negative impact on members who would benefit from these products and on credit unions’ non-interest income and loan portfolio risk profile,” the letter added. Comments on the Fed proposal are due by Dec. 23, and CUNA is working to compile credit union commentary ahead of that date. CUNA has also engaged the National Credit Union Administration (NCUA) to discuss concerns related to the NCUA’s methodology for setting the Overhead Transfer Rate (OTR), which is the proportion of NCUA’s insurance and supervisory costs that may be paid for the NCUSIF. Cheney said he is “encouraged that NCUA is using an outside party to review the OTR.” Cheney in his weekly CUNA regulatory advocacy report also noted that the National Credit Union Administration’s final rule on corporate credit unions, which was released last month, will come into effect on Jan. 18. However, many portions of the bill, including new capital requirements for the corporates, will phase-in at later dates.


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